Overview Capital First Ltd. is a Systemically important NBFC with record of consistent growth & profitability. Capital First has a comprehensive product suite to meet multiple financial needs of customers including Consumer Lending, Corporate Lending and Wealth Management services Capital First has Loan Assets of Rs. 44.20 bn (~ $ 838.87 mn*) as of 30 September 2012. Capital First focuses on secured lending with high asset quality Gross and Net NPA of the Company stood at 0.18% and 0.04% respectively as of 30 September 2012. Capital First has a strong distribution set up through 202 branches across India covering more than 40 cities. Capital First has a workforce of 1272 employees ably led by highly experienced and reputed management team. The Net Worth of the Company is Rs. 9.79 bn as of 30 September 2012 On September 28, 2012, Warburg Pincus acquired 40% of the erstwhile Company Future Capital Holdings Limited from promoters and additionally infused Rs. 1.00 billion of primary capital into the company. Post the completion of Open Offer for acquiring 26% from the public, Warburg Pincus as the promoter now holds 67.35% of the entire equity share holding of the Company, rebranded as Capital First Ltd. Corporate Presentation Q2-FY13 2
Our Vision To provide MSME clients with capital and support the growth of Micro, Small and Medium Enterprises in India. To capitalize on growing consumption in India, which is a key driver of the Indian economy. To grow into a significant financial conglomerate and build businesses of retail loans, corporate loans & Wealth Management. To help our clients succeed by providing innovative product solutions, high level of convenience, supported by robust technology. Corporate Presentation Q2-FY13 3
Comprehensive Suite of Products & Services Borrowing needs Protection needs Mortgages (for SMEs) Gold Loans Consumer Durable Loans Two Wheeler Loans Home Loans Wholesale loans and syndication Consumer Distribution of : Life Insurance General Insurance Auto Insurance Health insurance Personal accident insurance Travel insurance Distribution of : Property Broking Mutual Funds Real Estate Funds Equity Broking Commodity Broking Estate Planning- Creation of Private Trust Wills Creation Real estate Advisory Wealth Management Financial Planning Investment needs Planning needs Corporate Presentation Q2-FY13 4
Loan Book Changing Composition 81% 19% 71% 29% 42% 58% 42% 58% FY10 FY11 FY12 H1-FY13 Wholesale Credit Retail Credit The Company plans to continue increasing the contribution of retail loan book to the overall loan book Corporate Presentation Q2-FY13 5
Retail Loan Book Composition Q2-FY13 Mortgage Loans 74% Others 6% Consumption Loans 3% Two-wheeler Loans 3% Gold Loans 14% The retail loan book of the Company has increased by 56% from Rs. 16.30 Bn in Q2-FY12 to Rs. 25.50 Bn in Q2-FY13 Corporate Presentation Q2-FY13 6
Branch Network Amritsar: Jalandhar: Chandigarh: Delhi & NCR Jaipur Ajmer Kotta Jodhpur Udaipur Bhopal Ahmadabad Baroda Rajkot Indore Surat: Nasik Mumbai& Thane Pune Bangalore Coimbatore Ludhiana Dehradun Chennai Vellore Salem Through an Extensive Branch Network, Capital First has reached Customers across most of the states and major cities (Tier -1, Tier -2) in India Lucknow Vizag Hyderabad Raipur Nagpur Bhubaneswar Kolkata Total 202 Branches Corporate Presentation Q2-FY13 7
Processes Underwriting Control At Capital First, there is segregation of authorities and responsibilities across all functions. Sales, credit, operations and collections are independent of each other, with independent reporting lines. We underwrite all loans on the basis of cash flow capability of the customers as well as LTV norms. Proposals are checked with credit bureaus, and loans are approved only if the customers have a clear record with India s leading Credit Bureau, CIBIL. A robust collections infrastructure is in place. Corporate Presentation Q2-FY13 8
Mortgages Application to Approval Ratio Rigorous and robust credit assessment processes in Capital First help in maintaining the high asset quality and low NPA levels -7-39 In Mortgages, 29% of the total applications are disbursed after passing through several levels of scrutiny and checks, mainly centred around cash flow evaluation, credit bureau and reference checks 100-5 -10-10 29 Application Logged in CIBIL Rejections Rejections due to Insufficient Cashflow Rejections after Personal Interview Rejections due to Defective Title Deeds Others Rejections Net Disbursals Corporate Presentation Q2-FY13 9
Funding (as on 30 Sep 2012) Equity, 17% Long Term NCD, 9% Bank Borrowings, 69% Long Term Short Term Borrowings, 5% Long Term We follow a policy of only matched funding for all assets, and majority of the borrowing are long term in nature. Corporate Presentation Q2-FY13 10
Equity Shareholding Pattern (as on 07 Nov 2012) Others, 2.10% Promoters (Warburg Pincus- Cloverdell) 67.35% Individuals, 7.39% Bodies Corporate, 22.04% Financial Institution, 0.19% FII, 0.93% Financial Institutions include Banks, Mutual Funds, Insurance Companies and other Financial Institutions Others include NRI-Repatriable, NRI-Non-Repatriable, Clearing Members and Trusts Corporate Presentation Q2-FY13 11
Financials Corporate Presentation Q2-FY13 12
Significant Changes in Accounting Policy in FY 13 During the quarter ending September 2012, the company changed the accounting policy and made it more conservative. These changes and its impact on the P and L are described below. The company, in the course of its normal business collects fees for wholesale lending, receives income by assigning loans, and pays fees for securing credit limits to financial institutions. The net income (A)* of these activities is positive. So far, the company has followed a policy of booking this income upfront. From Q2-FY13, this income is being amortized over the average tenure of loans, and therefore the profits will accrue to the P&L of the company over the life of the loan. Since in FY12 the above income was accounted upfront, and in FY13 this is being amortized, the YOY and QOQ financials are not comparable. The net income from such activities in FY12 was Rs. 946 mn. On an average, the net positive income every quarter from such activities, booked upfront, in FY12, was Rs. 236 mn. Under the revised accounting policy this is being amortized over the life of the contract. Had the company continued with the earlier policy, the Net Profit of the company for Q2 FY13, would have been Rs. 288 mn and the Net Profit for the H1 FY13 would have been Rs. 548 mn. * Explained in detail in the next slide
Simulation on effect of Amortization of Income in FY 13 This slide is a simulation to understand the impact of the new policy of amortising net income. For purpose of this simulation, the actual performance of FY12 for income from such activities has been assumed constant over 8 quarters, and the impact has been demonstrated here. The actual income from these activities in the quarters to follow in 2013 and beyond may be more or less depending on market conditions and this table should not be read as a guidance for the future performance. Amounts are in Rs. Mn Period Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Net Income under Upfront Accounting (earlier Accounting method) (A) Net Income under Amortized Accounting (new Accounting Method) (B) 236 236 236 236 236 236 236 236 21 41 62 83 103 124 145 165 Impact on Quarterly P&L (B-A) -215-195 -174-153 -133-112 -91-71 As seen from the table above, though the income recognition to P&L is lower in the immediate quarters as per the new accounting method, eventually the profits will converge and the impact is neutralised over time. Corporate Presentation Q2-FY13 14
Profit & Loss (Consolidated) All figures are in Rs. mn unless specified Particulars Q2-FY 13 Q2-FY 12 Interest Income 1,793.64 1,356.39 Less: Interest Expense 1,219.97 823.12 Net Interest Income (NII) 573.67 533.28 Income from Assignment 22.26 66.61 Fee income 60.92 177.55 Other Income 252.02 74.53 Total Income 908.87 851.97 Opex 684.63 404.66 Operating profit 224.23 447.30 Provision 16.52 36.18 PBT 207.71 411.11 Tax 25.69 127.38 PAT 182.02 283.74 Corporate Presentation Q2-FY13 15
Balance Sheet (Consolidated) All figures are in Rs. mn unless specified Particulars SOURCES OF FUNDS As on September 30, 2012 As on March 31, 2012 Net worth 9,794 8,316 Loan funds 46,981 43,863 Total 56,775 52,179 APPLICATION OF FUNDS Fixed Assets 413 1,087 Deferred Tax Asset (net) 105 69 Investments 111 228 Current Assets, Loans & Advances Loan Book 44,206 46,704 Other current assets and advances 15,970 8,772 Less: Current liabilities and provisions 4,029 4,681 Net current assets 56,146 50,795 Total 56,775 52,179 Corporate Presentation Q2-FY13 16
Capital First Limited India Bulls Finance Centre Tower II, 15th Floor Senapati Bapat Marg Elphinston (West) Mumbai 400 013 Website www.capfirst.com E-mail Investor Relations - Investor.relations@capfirst.com Telephone +91 22 40423400 Corporate Presentation Q2-FY13 17
Mr. V. Vaidyanathan is the Chairman and Managing Director of Capital First Ltd. Capital First is a leading player in financing Micro, Small and Medium enterprises. (MSMEs) and is listed on NSE and BSE. The company also provides Gold loans, Two Wheeler loans, Consumer Durable loans, Wealth Management and Broking, and uses cutting edge technologies in on-boarding and customer lifecycle management. Recently, Warburg Pincus, one of the worlds most reputed Private Equity players, with funds of over US$ 40 billion in 36 countries, has acquired a majority stake and became the promoters of Capital First. The Fund called WP XI promoted by Warburg Pincus, the investor in Capital First, has committed capital of USD 5.1 Billion. Prior to this, he was the Managing Director and CEO of ICICI Prudential Life Insurance Company Limited. He was earlier appointed Executive Director on the Board of ICICI Bank at the age of 38. He was also the Chairman of ICICI Home Finance Co. Ltd, and served on the Board of ICICI Lombard General Insurance Company and CIBIL, India s first credit bureau. He worked with Citibank Consumer Banking from 1990 to 2000. Setting up the ICICI Bank s Retail Banking Business since its inception in 2000 and managing it till 2009 is the most significant highlight of his career. He also built the SME business and Rural Banking Business for the bank. His contribution includes building a network of 1400 Retail branches in 800 cities, with a team of 26000 people, building a vast deposit base, a franchise of 25 million customers, and built a loan book of USD 30 billion in Mortgages, Auto and Consumer loans and took ICICI Bank to market leadership. The Retail banking Business was a key driver to help transition ICICI from a Domestic Financial Institution in the 90s to a Commercial Bank. Over the years, his contribution won him many domestic and international awards including Best Retail bank in Asia 2001, Excellence in Retail Banking Award 2002, Best Retail Bank in India 2003, 2004, and 2005 from the Asian Banker, Most Innovative Bank 2007, and was nominated Retail Banker of the Year by EFMA Europe for 2008. He is an alumnus of Birla Institute of Technology and Harvard Business School. He is a regular marathoner and has run 7 marathons. He lives in Mumbai with his family of father, wife and three children. Corporate Presentation Q2-FY13 18